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Market Data and Trends
More than 2,700
Active Outsourcing Contracts Under Way as 2007
Concludes
We’re often asked about the
size of the commercial outsourcing market. The best way
we’ve found to gauge the current state of the industry
is through looking at the universe of active outsourcing
contracts underway. For purposes of segmentation, we
look at commercial outsourcing contracts valued
initially at US$25 million or greater.
As 2007
draws to a close, we count 2,708 active contracts
underway — an all-time high. While the pace of new
contract awards has slowed during 2007, there remains a
net increase in the number of these relationships
underway. Terminations are few, and renewals are almost
certain. The result? A continually increasing market.
As for the dollar value of those active
contracts, we estimate that 2007 will yield almost US$78
billion in economic value through outsourcing. That’s
the estimate of the sum of the 2007 revenue of the
industry’s service providers through those active
contracts. The table below depicts the market in greater
detail.
Look for greater detail on the
year-over-year changes in market sizes during the
January TPI Index conference call. In the meantime, if
you’d like to query us regarding the market activity
within a specific industry segment or functional domain,
please drop a note to TPI.
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Increasing Value through Strategic
Multi-Sourcing: Highlights from TPI’s Americas Sourcing
Leadership Exchange Conference.
TPI held its 16th semiannual Sourcing
Leadership Exchange (SLE) conference for the Americas on
November 5 - 7 in Naples, FL. This invitation-only
conference, designed to facilitate collaborative
learning, networking and sharing of best practices among
sourcing executives in a confidential forum, was
attended by 137 executives representing 67 organizations
from Canada, Mexico, the United Kingdom and the United
States — the largest SLE conference in TPI’s history in
terms of number of attendees.
The theme of the
conference was “Increasing Value through Strategic
Multi-Sourcing,” and the event featured 25 unique
sessions tailored to specific subject matter interest of
our attendees including: Applications Development and
Maintenance (ADM), Finance and Accounting (F&A),
Human Resources (HR), IT Infrastructure, Service
Management and Governance (SM&G) and Multi-Function
Services.
TPI has produced a conference
summary, The
Exchange, to recap, predominant themes and sessions
that spurred the most discussion and interest from
attendees. To preserve the confidentiality of the
program and its participants, a core tenet upon which
the SLE was founded, we have not attributed quotes or
included identifying details in this report.
To
request copies of the presentations from the SLE, please
contact Todd
Miller. The next Americas SLE conference will be
hosted in Chicago, Illinois, April 30 – May 2, 2008. For
registration information please contact Stephanie
Darkoch.
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Featured Paper
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What
Is Strategic Sourcing?
By Tony
Rawlinson, Partner, TPI; and
Dr. David Howie, Senior
Advisor, TPI
Financial services firms and
companies across all industries may benefit from greater
sourcing success by moving from a series of short-term,
tactical strategies to “strategic sourcing.” This paper
describes strategic sourcing, proposes a standard set of
definitions, explains what distinguishes strategic from
tactical sourcing, and explains why the former approach
may be a differentiator for companies striving to
enhance their competitive advantage.
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| Perspectives |
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Innovation
is Not Process Improvement
By
Kimberly Fey, Sourcing Industry Relations, TPI
Somewhere in the journey of market
maturity within the outsourcing industry, the
players came to use the term “innovation” as a
catch phrase for “new, better stuff.”
Unfortunately, the participants tended to apply
varying definitions regarding newness,
"betterness," and (most importantly) whether
these traits demanded added fees. The result of
this tangled web is a great degree of
misperception and unfulfilled expectations.
See TPI’s view on innovation and
suggested changes in how innovation is discussed
and applied through outsourcing.
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| Podcasts |
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Creating
and Sustaining Strategic
Relationships
This edition of
SourcingTalk was recorded at TPI’s 16th
semiannual Americas Sourcing Leadership Exchange
(SLE) conference in Naples, Florida. At the
conference, TPI’s Peter Allen, partner and chief
marketing officer, sat down with Lynn Blodgett,
president and CEO of Affiliated Computer
Services (ACS), and Scott Gildner, partner and
president, TPI North America, to discuss the
development and value of strategic outsourcing
relationships.
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Also in this Issue...
Re-Learning
the Lessons from Outsourcing’s V1.0: The Value Comes through
Governance
The record
shows that a commitment to a strong, organized, and sponsored
competency for service management and governance is the
essential determinant of success or failure in outsourcing.
But how do you move away from the notion of “contract
management” and adopt the more holistic perspective of
“service management” that embraces all of the participants in
a services “value chain?”
The
Future of Engagement Structures
As 2007 draws
to a close, we see some signs of changing market conditions.
The current industry can be characterized as offshore dominant
— focused on contracting for effort and applying multisourcing
strategies to maintain competitive tension and reduce
concentration risk. The net effect on engagement structures
has been shorter-term contracts with a narrower scope than we
have previously seen.
Client
Opportunities for Leveraging Industry-Leading Expertise
Increase
On November 16, 2007, TPI became the cornerstone of
an exciting new enterprise — Information Services Group (ISG),
with the vision of offering enterprises an unparalleled
portfolio of expertise, data and services to help them achieve
their objectives of maximizing their business performance.
TPI
News
TPI
Releases New Data on HR Outsourcing Trends in Europe
TPI highlighted at the 2007
HRO Europe conference in Brussels new data indicating that
Human Resources Outsourcing (HRO) is on the upswing for
European companies.
TPI
Leader Mark Mayo Wins Procurement Category in Best Outsourcing
Thought Leadership Awards
Mark Mayo, Partner and
President of TPI’s Global Resources Management, took top
honors in the procurement category for the 2007 Best
Outsourcing Thought Leadership Awards. The program, sponsored
by The Outsourcing Institute and The Delve Group, Inc.,
recognizes innovative ideas that advance outsourcing best
practices and understanding.
To view Mayo’s category-winning article, "In
Search of the Holy Grail,” (published in the EDS Agility
Alliance journal) click
here.
Upcoming TPI
Events
Americas
Sourcing Industry Conference
The Drake Hotel Chicago,
Illinois April 21 - 22, 2008
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